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The BLS Report Covering November 2013: Effects of the Government Shutdown Fade, Part Time Work Increases

In the household survey on employment, seasonally unadjusted, the October government shutdown took out expected October highs and created losses in numerous categories. In November, these were largely reversed. The biggest ongoing hit is to the labor force which is still 490,000 smaller than it was in September. And while employment increased, unadjusted, 631,000, most of this was in part time jobs (554,000). Unemployment fell 504,000, reflecting that most of the net change in employment came from the unemployed finding work, and not from an influx of those defined as outside the labor force.

The end of the government shutdown was also reflected in the decline of the official (adjusted) unemployment rate from 7.3% to 7.0%. My alternate calculation of this returned to its pre-shut down level of 12.6%.

In the business survey in November, seasonally adjusted (trendline) 203,000 jobs were added to the economy. Taken together with October, 403,000 jobs were added. This is essentially unchanged from the 407,000 added during this period last year. And this November’s number is 44,000 smaller than last November’s 247,000. Trendline, job creation for the first 11 months of 2013 is running 9,000 a month higher than in 2012 (188,000 vs. 179,000). The general rule of thumb is that only job creation substantially over 200,000/month will significantly affect the nation’s unemployment crisis.

Unadjusted, total nonfarm jobs increased 421,000, and the private sector grew by 309,000. Most of these jobs continue to be crap. One bright note was hours and earnings were both up slightly. Earnings for all workers are running ahead about 2.3% year over year.


Household/Employment Survey

Potential Labor Force
In November, the Civilian Non-Institutional Population over 16 (NIP) representing the nation’s potential labor force grew 186,000 from 246.381 million to 246.567 million. Multiplying this increase by the employment-population (58.6%) gives 109,000, a rough estimate of the number of jobs needed in November to keep up with population growth. As you can see, trendline the economy did about 90,000 better than this.
Labor Force
Seasonally adjusted, in November, the labor force grew 455,000 from 154.839 million to 155.294 million. This reflects the end of the government shutdown, but it is still 265,000 less than September’s 155.559 million.

Unadjusted, the labor force grew 128,000 from 154.918 million to 155.046 million. This number is 490,000 smaller than in September.

Basically, we would expect a peak in the labor force in October but this didn’t happen because of the government shutdown. The difference between the September and November numbers is about the same as last year with seasonal adjustment. Unadjusted though, the drop off is about 370,000 larger than expected, indicating a bigger hit to the economy.

Participation Rate
The respective changes in the labor force are reflected in the participation rate, the ratio between labor force and the potential labor force as represented by the NIP. Seasonally, adjusted the participation rate rose two-tenths percent to 63.0%.

Unadjusted, it was unchanged at 62.9%.

In November, seasonally adjusted, employment showing the effects of the return to work following the end of the government shutdown increased 818,000 from 143.568 million to 144.386 million. To put this in perspective, seasonally adjusted employment is now only 83,000 larger than it was in September. Last year the September to November increase was 303,000.

Unadjusted, employment increased 631,000 from 144.144 million to 144.775 million, 124,000 larger than the September number. Last year September-November employment grew by 216,000.

Employment-Population Ratio
Seasonally adjusted the employment ratio, the ratio of the employed to the potential labor force of the NIP, increased three-tenths percent to 58.6% (same as September).

Unadjusted, it grew two-tenths percent to 58.7% (58.8% in September).

In November, seasonally adjusted unemployment decreased 365,000 from 11.272 million to 10.907 million.

Unadjusted, it fell 502,000 from 10.773 million to 10.271 million. Given that the unadjusted labor force increased by 128,000 and employment increased by 631,000, the drop in unemployed came from job finding and not from being defined out of the labor force.

In this regard, it is important to remember that the BLS uses a restrictive definition for unemployed. It does not mean without a job but want one. Under the jobseeker model the BLS uses, it means without a job but have looked for one in the last 4 weeks.

Unemployment rate
Seasonally adjusted, unemployment decreased three-tenths of a percent to 7.0%.

Unadjusted, it declined four-tenths of a percent to 6.6%.


Full Time vs Part Time Employment
Seasonally adjusted (trendline), full time employment (35 or more hours/week) increased 652,000 from 116.276 million to 116.928 million. This rise returned it to near its pre-shutdown September level of 116.899 million or an increase of 29,000. In contrast, last year the September to November increase in full time employment was 406,000.

Seasonally adjusted part time employment (1 to 34 hours/week) grew 174,000 from 27.278 million to 27.452 million, 47,000 more than in September. Last year September to November part time employment actually fell 175,000.

Unadjusted, full time employment rose 77,000 to 116.875 million from 117.798 million. This is 433,000 fewer than in September. By comparison, last year, the fall off from September was 163,000.

Part time employment (actual) exploded up 554,000 from 27.346 million to 27.900 million. In 2012, September to November, part time workers increased only by 179,000.

Involuntary vs. Voluntary Part Time Employment
Seasonally adjusted, involuntary part time workers decreased (331,000) to 7.719 million from 8.050 million.

Unadjusted, they decreased 137,000 from 7.700 million to 7.563 million.

Voluntary part time workers, seasonally adjusted, rose 90,000 from 18.786 million to 18.876 million.

Unadjusted, voluntary part time workers grew 400,000 from 19.228 million to 19.628 million. This large increase explains most of the increase in part time workers, seasonally unadjusted, noted in the previous section.

[Standard Note: As usual, I will note that the distinction between voluntary and involuntary is often in the eye of the beholder. Part time workers for voluntary reasons include those who must work part time because of they are raising children, taking care of a relative, or on Social Security and must restrict their hours to stay below Social Security limits on income. For the workers involved, part time work often is not a voluntary choice.]


The U-6
Post shutdown, the BLS' broader measure of un- and under employment, the U-6, decreased, seasonally adjusted (trendline) 0.6% to 13.2%. Unadjusted, it decreased 0.5% to 12.7%.

Seasonally adjusted, the U-6 is composed of 10.907 million unemployed, 7.719 million involuntary part time workers, and 2.096 million of the marginally attached (those who have no job but looked for work in the last year but not the last month; a decrease of 187,000 from October), or 20.722 million total, a drop of 883,000 from last month (and the shutdown).

[Standard note]
As said above, the BLS has a restrictive, though internationally recognized, definition of unemployment, that is without a job but have looked for one in the last 4 weeks. The marginally attached are not counted as part of the labor force and their use in the U-6 is an indication that this is what the BLS considers its functional undercount to be.

The BLS also has a more extended category: Not in Labor Force, Want a Job Now (seasonally unadjusted). In November, this fell 246,000 to 5.437 million.

This BLS category does not often reflect well actual movements in the economy. So I have developed a simple alternative to it. I calculate the size of where the labor force should be by multiplying the potential labor force of the NIP by a participation rate characteristic of a solid economic expansion (67%, the Clinton boom was at or above this level for nearly 40 months). The difference between this and the current labor force measures the size of the real BLS undercount, those who do not have jobs but would work if jobs were available to them. This then allows me to recalculate where real unemployment is and where real un- and under employment (disemployment) is.

.67(246.567 million) = 165.200 million (where the labor force should be)
Trend Undercount:
165.200 million — 155.294 million = 9.906 million, a decrease of 330,000 from October
Current Undercount:
165.200 million — 155.046 million = 10.154 million, a decrease of 363,000 (from up 862,000 in October)

Real Trend Unemployment (that is seasonally adjusted) :
10.907 million (U-3 unemployment) + 9.906 million (undercount) = 20.813 million, down 695,000 (from up 879,000 in October due to the federal government shutdown)
20.813 million / 165.200 million = 12.6%, down 0.4% (from up 0.4% last month)

Real Unemployment Now (i.e. seasonally unadjusted) :
10.271 million (U-3 unemployment) + 10.154 million (undercount) = 20.425 million, down 865,000 (from up 1.008 million in October)
20.425 million / 165.200 million = 12.4%, down 0.5% (from up 0.6% in October)

Real Trend Disemployment:
Real Trend Unemployment + involuntary part time workers seasonally adjusted = 20.813 million + 7.719 million = 28.532 million, down 1.026 million (from up 1.003 million last month due to the government shutdown)
28.532 million / 165.200 million = 17.9%, down 0.6% (from up 0.6% last month)

Real Disemployment Now:
Real Unemployment Now + involuntary part time workers seasonally unadjusted = 20.425 million + 7.563 million = 27.988 million, down 1.002 million (from up 1.186 million in October)
27.988 million / 165.200 million = 16.9%, down 0.7% (from up 0.7% last month)

As I have pointed out, the rationale for my calculation and use of this undercount is that it closely reflects what is going on in the economy. And the government shutdown provides an illustration of this. The shutdown pushed these numbers up substantially in October and once the shutdown was over, the numbers reverted to pre-shutdown levels. While government employees may have been paid for their time away from work due to the shutdown, these calculated figures indicate that significant numbers of non-government employees were also affected, and it is unlikely that their reduced wages were made up.
The number of long term unemployed (6 months or more) increased slightly (3,000) to 4.066 million. The long term unemployed account for 37% of the U-3 unemployed, a 1% increase from October.

White unemployment decreased one-tenth percent to 6.2%. White teen unemployment increased 0.8% to 18.6%. African American unemployment decreased 0.7% to 12.3%. African American teen unemployment was little changed, decreasing 0.2% to 35.8%.

Establishment/Business/Jobs Survey

Seasonally adjusted the private sector added 196,000 jobs and government 7,000 yielding the reported 203,000 total.

Last month’s jobs estimate was revised down 4,000 to 200,000 and September’s was revised up 12,000 to 175,000.

Seasonally adjusted total nonfarm jobs were 136.765 million (up 203,000). Total private were 114.908 million (up 196,000).

Unadjusted, total nonfarm jobs increased 421,000 to 137.942 million. Private sector jobs increased 309,000 to 115.622 million.

Unadjusted, construction fell 57,000 to 5.955 million. Manufacturing fell 3,000 to 12.022 million.

Unadjusted, the subsector of private service providing jobs increased 420,000 to 96.761 million, of which retail trade added 471,000 to 15.7731 million, transportation and warehousing added 70,000 to 4.6007 million; temp jobs increased 13,100 to 2.8798 million; healthcare added 44,700 to 14.6910 million, and leisure and hospitality lost 214,000 to 14.009 million. As per usual, the jobs being created are not good quality jobs.

Unadjusted, government added 112,000 jobs to 22.320 million. State education gained 34,300 to 2.5931 million, and local education added 104,600 to 8.1443 million. This marks the end of the back to school state and local education hiring.

Hours and Earnings
Average weekly hours for all employees on private nonfarm payrolls increased one-tenth hour to 34.5 hours. Average hourly earnings increased 4 cents to $24.15/hour and average weekly earnings grew $3.80 cents to $833.18. a 2.3% increase yoy.

Average weekly hours for production and nonsupervisory (blue collar and clerical) personnel fell also grew 0.1 hour to 33.7 hours (the same as a year ago). Average hourly earnings increased 3 cents to $20.31/hour. Average weekly wages increased $3.04 to $684.45, a 2.2% increase yoy.

Household data (Employment/unemployment)
Statistical significance: +/ - 300,000
The A tables:
A 1 for most information and categories
A 2 Unemployment by race
A 8 Part time workers
A 9 Full time workers
A 12 Duration of unemployment
A 15 U 6 un- and under employment
A 16 Persons not in labor force

Establishment date (jobs)
Statistical significance: +/ - 90,000
The B tables:
B 1 Total jobs and jobs by industry/type
B 2 Weekly hours, all employees
B 3 Hourly and weekly earnings, all employees
B 6 Weekly hours, blue collar
B 7 Hourly and weekly earnings, blue collar

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